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W  14L 


THE  PROBLEM 


...OF ... 


TheTIrust 


BY 

H.  QAYLORD  WILSHIRE 


LOS  ANGELES,  CALIFORNIA 

U.  5.  A. 


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B.  R.  Baumgardt  &  Co. 


THE  PROBLEM 


OF- 


THE  TRUST 


BY- 


H.  GAY  LORD  WILSHIRE 


LOS  ANGELES,    CALIFORNIA 
U.  S.  A. 


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THE  TRUST  PROBLEM. 


An  address  delivered  by  H.  Gaylord  Wilshire,  before  the  Economic  Club 
of  Los  Angeles,  January  23,  1900. 


A  significant  change  in  public  opinion  regarding  the 
trust  issue  has  occurred  in  the  last  few  years.  It  is  not 
so  long  ago  when  all  our  public  men  and  newspapers 
had  but  one  solution  for  the  problem;  "the  trust  must 
be  destroyed,"  they  said.  Today,  with  the  possible 
exception  of  Mr.  Bryan  and  a  few  other  belated  in- 
dividuals, nobody  in  his  right  senses  looks  to  the  pos- 
sibility of  the  destruction  of  trusts.  They  are  now  se<  i 
to  be  the  inevitable  result  of  our  competitive  economic 
system. 

I  do  not  propose  to  devote  any  great  attention  this 
evening  to  a  demonstration  of  this  inevitability  of  the 
trust  as  I  regard  such  a  task  as  practically  superfluous 
before  such  an  intelligent  body  of  students  of  econom- 
ics as  comprises  this  club. 

The  point  I  care  more  to  dwell  upon  is  not  the  inevi- 
tability of  the  trust,  which  I  hope  will  generally  be 
agreed  upon,  but  upon  the  impossibility,  in  an  eco- 
nomic sense,  of  the  permanence  of  the  trust.  Let  me 
say  at  once,  before  I  raise  false  hopes  in  the  breasts 
of  the  few  classical  economists  that  may  be  here  to- 
night that  I  do  not  propose  to  show  that  trusts  must 
fall  to  pieces  of  their  own  weight  and  that  competition 
must  be  restored  owing  to  the  entrance  of  fresh  capi- 
tal into  the  field  attempted  to  be  monopolized  by  the 
trust.  That  would  be  an  extremely  silly  position  for  me 
to  take  after  having  asserted  the  inevitability  of  the 
trust. 

Neither  am  I  attempting  a  glittering  paradox  by 
first  asserting  the  inevitability  of  the  trust  and  in  the 
next  breath  its  impossibility.  Nor  am  I  looking  to  that 
great  drove  of  donkeys,  the  American  people,  to  rise 


160779 


4 

in  their  might  and  drive  the  monster  from  their  midst. 
The  theory  which  I  shall  attempt  to  demonstrate  to- 
night is  that  the  natural  and  inevitable  development  of 
our  industrial  system  is  from  competition  under  pri- 
vate ownership  to  monopoly  under  private  ownership 
and  from  private  monopoly  to  monopoly  under  public 
ownership.  In  claiming  the  impossibility  of  perma- 
nence under  private  monopoly,  I  speak  simply  from  the 
standpoint  of  the  political  economist,  and  I  leave  out 
of  consideration  political  and  industrial  changes  that 
might  or  might  not  be  brought  about  by  the  voluntary 
uprising  of  a  long  suffering  and  indignant  people. 

Public  ownership  of  industry  might  be  brought 
about  next  month  if  the  people  had  a  sufficient  desire 
to  effect  it.  It  is  not  to  the  "might  be"  I  appeal  to  this 
night,  but  to  the  "must  be." 

I  shall  endeavor  to  prove  that  public  ownership 
otherwise  socialism,  is  not  inevitable  because  it  is  de- 
sirable, but  because  it  comes  into  the  category  of  the 
inexorable  necessity.  My  first  task  is  to  prove  the 
necessity  of  the  trust.  My  next  is  to  prove  the  ne- 
cessity of  socialism. 

The  trust  arose  from  the  desire  of  the  manufactur- 
ers to  protect  themselves  from  over-production  and  the 
consequent  mad  and  suicidal  struggle  to  dispose  of 
their  surplus  stock. 

Over-production  arises  because  our  productive  capa- 
city has  been  developed  to  the  highest  degree  with 
labor  saving  machinery  operated  by  steam  and  electri- 
city, while  our  consumptive  capacity  is  crippled  by  the 
competitive  wage  system  which  limits  the  laborers, 
who  constitute  the  bulk  of  our  consumers,  to  the  mere 
necessities  of  life.  I  will  not  tire  you  with  long  sta- 
tistics exhibiting  the  enormous  strides  that  have  taken 
place  in  the  productive  capacity  of  men  due  to  modern 
machinery,  nor  will  I  harrow  your  souls  with  the  well- 
worn  details  of  the  narrow,  sordid  life  of  squalor  lived 
by  millions  of  our  workers.  It  is  patent  that  the  day 
worker  of  today  consumes  but  little  if  any  more  of  the 


necessities  of  life  than  did  his  grandfather  of  50  years 
ago. 

Statistically  it  can  be  shown  that  the  consumption  of 
beef,  flour,  potatoes,  coffee,  tobacco,  wool  etc.,  has  va- 
ried little  if  any  per  capita  in  the  last  50  years.  How- 
ever, every  student  of  history  knows  in  a  general  way 
that  the  ordinary  laborers  of  this  country  50  or  even 
100  years  ago  lived  in  a  fair  degree  of  comfort,  were 
warmly  clad  in  their  homespun  and  comfortably  housed 
in  their  log  cabins.  The  best  proof  of  their  condition 
was  their  notoriously  fine  physical  development,  longev- 
ity and  freedom  from  disease.  The  average  family  was 
from  10  to  14,  and  neither  the  husband  nor  the  wife 
felt  the  dread  of  an  addition  to  the  family  that  is  so 
characteristic  of  today. 

I  do  riot  think  any  fair-minded  person  can  but  admit 
that  the  modern  day-laborer  on  his  $1.50  per  day,  and 
very  uncertain  of  that,  living  in  a  city,  wearing  shoddy 
clothes,  breathing  sewer  gas,  eating  tuberculous  beef, 
drinking  typhoid  baccilli  in  his  milk  and  fusel  oil  in  his 
whiskey,  and  absorbing  intellectual  garbage  from  his 
yellow  journal,  has  had  any  great  augmentation  in  the 
pleasures  of  life  through  the  inventions  of  the  mar- 
velous nineteenth  century. 

But  it  may  be  pertinently  asked,  "Where  has  dis- 
appeared this  immense  stream  of  products  that  is  the 
result  of  the  labor  of  the  nation  applied  to  modern 
machinery?" 

Taking  the  product  of  labor  as  a  whole  it  flows  into 
two  broad  channels,  one  to  the  capitalists,  the  holders 
of  wealth,  and  one  to  the  workers.  The  ordinary 
workers  must  be  given  enough  to  keep  them  in  effi- 
cient condition,  part  of  the  workers,  the  aristocracy  of 
labor,  the  trade-unionists  and  skilled  labor  generally, 
the  proletarians  who  sell  their  brains  rather  than  their 
hands,  may  get  something  above  the  mere  necessities 
but  broadly  speaking  competition  prevents  any  great 
augmentation  of  the  share  that  goes  to  labor  beyond 
that  of  the  mere  necessities.  The  whole  of  the  remain- 


der  of  the  product  of  labor  falls  into  the  lap  of  the 
holder  of  wealth  simply  as  a  rent  with  no  economic 
necessity  on  their  part  of  doing  anything  in  return  for 
it. 

Witness  the  enormous  income  of  the  Duchess  of 
Marlborough  and  the  Countess  Castellane,  representing 
abroad  the  Vanderbilt  and  Gould  wealth,  and  discover 
if  you  can  any  return  they  may  make  to  the  American 
people.  It  is  possible  that  somebody  might  strain  his 
imagination  into  believing  that  the  Astors,  the  Rocke- 
fellers and  the  Vanderbilts,  who  between  them  have 
an  income  something  like  $50,000,000  per  year,  per- 
form some  economic  good  in  return,  but  I  doubt  if 
their  most  generous  retainer  would  say  that  a  hundred 
thousand  a  year  each  would  be  too  little  considering 
that  our  college  professors  average  less  than  one  thou- 
sand. 

The  stream  of  wealth  flowing  into  the  coffers  of  the 
rich  is  itself  again  divided  into  two  streams,  one  of 
which  goes  to  satisfy  what  they  are  pleased  to  regard  as 
their  necessities  of  existence,  a  wonderful  conglomerate 
of  beefsteaks,  truffles,  champagne,  private  cars  and 
steam  yachts,  golf  balls,  picture  galleries,  food  and 
clothing  for  their  servants,  etc.,  all  classified  under  the 
general  head  of  consumables  and  is  denominated  by  the 
general  term  of  "spent"  money. 

The  other  stream  of  wrealth  flowing  to  the  rich  is 
what  is  termed  "saved"  money,  and  goes  into  the  build- 
ing of  new  machinery  of  production,  new  railroads, 
canals,  iron  furnaces,  mills,  etc.  .It  is  this  last  chan- 
nel for  the  "saved"  money  that  has  been  the  great 
sluice-way  for  carrying  off  the  surplus  product  of  labor 
and  so  avoiding  the  constant  menace  of  a  plethora  in 
our  industrial  system. 

Notwithstanding  that  the  prodigality  of  the  Ameri- 
can rich  in  unbounded  luxury  is  the  wonder  of  the 
ages,  still  the  percentage  of  the  very  rich  is  so  small 
(three  one-hundrdths  of  one  per  cent  own  $12,000,- 
000,000)  that  all  their  efforts  in  lavish  "spending"  have 


had  little  effect  economically  compared  with  the  wealth 
they  have  been  forced  to  "save"  owing  to  lack  of  in- 
genuity in  discovering  modes  for  "spending."  There 
is  a  grim  satisfaction  in  the  reflection  that  the  "saving" 
capacity  of  the  nation  is  increased  by  this  concentration 
of  wealth.  Thrift  is  no  longer  a  difficult  virtue  when 
it  requires  more  labor  and  pain  to  "spend"  than  it  does 
to  "save,"  and  this  is  the  predicament  of  the  very  rich 
Americans. 

No  man  cares  for  two  dinners,  and  when  Mr.  Rocke- 
feller and  his  $20,000,000  a  year  income  "spends"  over 
a  thousand  per  day  on  his  household  he  finds  it  proba- 
bly both  pleasanter  and  easier  to  "save"  the  remainder 
than  to  lay  awake  nights  devising  bizarre  ways  to 
"spend"  it.  However,  as  the  condition  of  affairs  now 
are  in  the  business  world  it  must  be  admitted  that  it 
is  about  as  difficult  for  him  to  discover  channels  to 
invest  his  savings  as  it  is  to  invent  ways  to  "spend"  it. 
I  pity  him.  When  he  started  in  the  business  of  refining 
oil  some  30  years  or  more  ago,  his  income  was  not  so 
great  that  he  was  bothered  with  any  difficulty  in  spend- 
ing it,  nor  was  the  oil  business  in  that  state  of  plethora 
that  there  was  no  inducement  for  saving  money  and  in 
vesting  in  it.  His  instinct  of  thrift  was  developed  suf- 
ficiently to  induce  him  to  devote  a  certain  part  of  his 
income  to  the  latter  end.  Others  in  the  business,  his 
competitors,  did  the  same.  Finally  the  capacity  for 
refining  oil  became  greater  than  the  market  demand e  1. 
Each  refiner  was  bound  to  get  rid  of  his  surplus  prod- 
uct at  any  price,  and  the  price  of  the  surplus  determined 
the  price  of  the  whole.  Ruin  stared  them  in  the  face. 
Over-production  must  be  curtailed.  The  Standard  Oil 
Trust  was  born. 

All  these  facts  have  been  brought  out  time  and 
agin  in  the  many  federal  and  state  inquiries  into  the 
Standard  Oil  Trust.  Rockefeller  has  proved  his  case 
in  the  congressional  investigation  of  1888  to  the  hilt 
that  competition  was  ruining  his  business  and  that  co- 
bination  had  become  an  absolute  necessity.  In  fact 


there  has  been  practically  no  questioning  his  testimony 
establishing  these  facts. 

The  politicians,  however,  thought  it  was  a  chance  to 
make  political  capital  and  urged  the  destruction  of  the 
oil  trust,  not  attempting  in  the  least  to  controvert 
Rockefeller's  statement  of  facts  showing  that  combina- 
tion was  an  absolute  necessity.  However,  notwith- 
standing the  efforts  of  the -politicians  to  overturn  the 
laws  of  nature  and  make  water  run  up  hill  Rockefeller 
presisted  in  combining  and  making  money  instead  of 
following  their  plan  of  competing  and  losing  money. 

The  Standard  Oil  Trust  flourished  like  a  green  bay 
tree.  Huge  dividends  on  its  heavily  watered  stock 
continued  to  become  greater  and  greater  from  year  to 
year  until  today  its  capital  stock  of  $90,000,000,  has  a 
market  value  of  nearly  $450,000,000,  and  John  D. 
Rockefeller  owns  more  than  half  of  the  whole.  To  go 
back  to  the  first  days  of  the  trust  we  find  that  combina- 
tion was  a  natural  remedy  for  cut-throat  competition 
arising  from  over-production. 

If  capitalists  in  the  oil  business  over-invested  in  that 
business  causing  over-production  of  oil  refineries  the 
only  reason  that  a  persistence  in  this  course  continued 
was  because  the  opportunities  for  the  investment  of 
capital  in  other  industries  promised  no  better  returns. 

Capital  like  water  seeks  its  own     level.      If     the 
profits  in  one  business  are  abnormal  and  if  investment 
is  open  then  fresh  capital  will  flow  into  that  business 
until  the  returns  are  reduced  to  the  normal.     Hence  as 
we  may  have  inferred  if  capital  was  investing  in  oil 
refineries    notwithstanding   the   unpromising   outlook 
it  was  doing  so  because  other  businesses  were  in  the 
same  state  of  plethora  and  could  offer  no  better  induce- 
ments.    That  this  was  true  is  fully  substantiated  by 
the  subsequent  formation  of  trusts  in  other  lines  c 
manufacture  to  prevent  the  very  same  plethora  of  capi- 
tal that  had  been  affecting  the  oil  business.    The  great 
industrial  undertakings  of  the  world  are  practically 
finished  as  far  as  present  developments  indicate. 

As  the  late  David  A.  Wells  says  in  his  "Recent  Eco- 
nomic Changes:"     "It  would  seem  indeed  as  if     the 


world  during-  all  the  years  since  the  inception  of  civili- 
zation has  been  working  up  on  the  line  of  equipment 
for  industrial  effort — inventing-  and  perfecting-  tools 
and  machinery,  building  workshops  and  factories,  and 
devising  instrumentalities  for  the  easy  communication 
of  persons  and  thoughts;  that  this  equipment  having  at 
last  been  made  ready,  the  work  of  using  it  has,  for  the 
first  time  in  our  day  and  generation  fairly  begun;  and 
also  that  every  community  under  prior  or  existing  con- 
ditions of  use  and  consumption,  is  becoming  saturated, 
as  it  were,  with  its  results." 

There  is  no  country  in  which  the  industrial  machin- 
ery is  not  only  so  thoroughly  completed,  but  actually 
over-completed,  if  I  may  coin  a  word,  as  in  the  United 
States.  In  normal  conditions  the  machinery  of  pro- 
duction will  produce  more  in  three  days  than  we  can 
consume  in  a  week.  The  present  boom  is  recognized 
by  all  as  destined  to  be  of  a  most  ephemeral  nature, 
and  existing  conditions  no  criterion  to  judge  by.  It 
is  true  that  while  over-production  makes  manifest  the 
desirability  of  combination,  yet  desirability  does  not 
necessarily  mean  practicability. 

As  a  general  law  in  economics  it  may  be  stated  that 
the  tendency  to  combination  increases  as  the  number 
of  competitors  decreases  and  the  amount  of  capital 
for  each  competing  plant  increases.  The  tendency  for 
both  these  conditions  to  manifest  themselves  in  our  in- 
dustrial world  is  almost  too  well  known  to  mention. 

In  1880  there  were  1943  plants  with  a  combined  cap- 
ital of  $62,000,000  manufacturing  agricultural  imple- 
ments; in  1890  there  were  but  910  plants,  while  the 
capital  invested  had  more  than  doubled.  The  number 
of  plants  engaged  in  manufactures  of  leather  decreased 
in  the  same  period  from  5424  to  1 596,  while  the  capital 
involved  increased  from  67  to  81  millions.  When  the 
statistics  for  1900  are  published,  the  trend  to  concen- 
tration will  be  still  more  clearly  shown. 

As  has  been  delineated,  the  stream  of  production  has 
been  constantly  rising  owing  to  the  development  of 
modern  machinery.  There  were  two  channels  to  carry 
off  these  products.  The  first  channel  carrying  off  the 


10 

products  destined  to  be  consumed  by  the  workers. 
This  channel  is  in  rock-bound  banks  that  cannot  en- 
large owing  to  the  competitive  wage  system  preventing 
wages  rising  pro  rata  with  increased  efficiency.  Wages 
are  based  upon  cost  of  living  and  not  upon  efficiency  of 
labor.  The  miner  in  the  poor  mine  gets  the  same  wages 
per  day  as  the  miner  in  the  adjoining  rich  mine.  The 
owner  of  the  rich  mine  gets  the  advantage  not  his  la- 
borer. The  second  channel  conveys  the  goods  destined 
to  supply  the  wants  and  whims  of  the  rich.  This  may 
increase  somewhat,  but  owing  to  the  small  number  of 
those  rich  enough  to  indulge  in  whims  it  can  never 
be  greatly  enlarged,  and  at  any  rate  it  bears  such  a 
small  relative  proportion  to  the  other  channel  that  in 
no  event  can  much  hope  of  avoiding  a  flood  of  capital  be 
looked  for  from  this  division.  The  rich  will  never 
be  so  ingenious  as  to  spend  enough  to  prevent  over- 
production. The  great  safety  overflow  channel  which 
has  been  continuously  more  and  more  widened  and 
deepened  to  carry  off  the  ever  increasing  flood  of  new 
capital  is  that  division  of  the  stream  which  carries  the 
savings  of  the  rich  and  this  is  not  only  suddenly  found 
to  be  incapable  of  further  enlargement  but  actually 
seems  to  be  in  the  process  of  being  dammed  up. 

And  why  not?  Man's  material  wants  are  limited  no 
matter  how  unlimited  may  be  his  spiritual  ones.  If 
one  bridge  is  sufficient  to  carry  me  from  New  York  to 
Brooklyn,  then  two  will  be  a  surplus.  When  one  car 
line  is  built  on  Broadway,  there  is  no  room  nor  ne- 
cessity for  more. 

Let  us  cast  a  broad  sympathetic  look  over  the  sur- 
face of  the  United  States  with  the  perplexed  eye  of  a 
man  with  a  million  dollars  or  more  looking  for  a  prom- 
ising and  safe  investment.  Would  he  care  to  build 
another  transcontinetal  railway?  I  think  not.  There 
are  too  many  already. 

Would  he  care  to  go  into  wheat-growing?  Not  if  he 
is  not  in  need  of  a  guardian.  One  year  it  pays,  then 
for  the  next  three  years  there  is  either  no  crop  on  ac- 
count of  drouth,  or  there  is  low  price  owing  to  over-pro- 
duction, and  the  wheat  grower  has  no  chance  of  form- 


11 

ing  a  trust.  Too  many  farmers  to  combine,  it  is  diffi- 
cult enough  to  get  ten  men  into  a  combination,  but 
when  you  have  10,000  it  is  manifectly  an  impossibility. 

Is  there  one  single  industry  which  he  could  find  that 
is  of  a  sufficiently  large  nature  to  warrant  the  invest- 
ment of  a  large  capital  that  is  not  manifestly  over- 
done? 

As  for  smaller  industries  there  is  consensus  of  opin- 
ion in  the  business  world  that  there  are  practically  none 
promising  good  returns  and  that  the  only  ones  that 
seem  to  be  good  are  of  a  parasitic  nature  and  which 
live  like  the  mice  in  a  granary  owing  to  their  insig- 
nificance. 

The  channel  which  carries  off  the  surplus  wealth  for 
the  upbuilding  of  new  industries  we  can  imagine  sub- 
dividing itself  into  a  many  branched  delta,  each  mouth 
furnishing  the  needed  supply  for  each  particular  indus- 
try. 

Before  there  was  an  over-supply  of  capital  in  any 
one  industry  the  capitalists  controlling  that  particular 
branch  of  the  delta  flowing  to  their  industry  were  us- 
ing all  efforts  to  widen  and  deepen  their  particular 
channel.  When  finally  they  had  received  all  the  capital 
they  wished  and  they  formed  their  trust  the  process 
was  reversed.  It  was  as  if  they  had  thrown  a  dam' 
across  the  entrance  of  their  delta  and  diverted  their 
current  back  into  the  main  stream  to  be  distributed 
through  the  other  mouths  for  other  industries. 

With  this  metaphor  before  you  it  is  easy  to  see  that 
with  the  closing  of  successive  mouths  by  successive 
trusts  so  much  the  greater  becomes  the  supply  for  the 
other  mouths  and  so  much  the  sooner  does  it  become 
imperative  that  the  capitalists  in  other  industries  throw 
across  their  protective  dam.  As  in  a  real  river,  so  it 
is  with  our  imaginary  river.  When  a  number  of 
mouths  are  dammed  up  the  river  no  longer  can  find 
an  exit  through  the  remaining  mouths  and  it  has  a 
strong  tendency  to  overflow  the  first  dams  put  up 
which  will  require  strengthening  if  they  are  to  remain 
secure. 


12 

This  is.  seen  in  our  industrial  world  when  a  trust  is 
submerged  either  by  outside  capital  in  general  or  the 
concentrated  wealth  of  some  other  trust  making  an 
onslaught  upon  it. 

Rockefeller  with  his  enormous  surplus  income, 
which  he  is  bound  to  "save"  and  cannot  from  the  very 
nature  of  things  find  room  to  invest  in  his  own  con- 
fessedly overdone  oil  business,  and  hence  is  constantly 
forced  to  seek  out  new  industrial  fields  to  conquer. 
He  is  the  modern  Alexander  the  Great  of  our  indus- 
trial field,  sighing  for  more  worlds  to  conquer. 

He  has  already  taken  possession  of  the  electric  light 
and  gas  plants  of  New  York  City.  He  is  fast  coming 
into  control  of  the  iron  industry.  He  already  owns  the 
Lake  Superior  mines  and  the  lake  transportation  ser- 
vice, and  his  only  competitor  in  the  manufacture  of 
iron  is  Carnegie,  who  is  only  waiting  to  make 
good  terms  of  surrender.  He  is  about  to  control  the 
copper  mines  of  the  United  States.  He  is  in  control  of 
the  largest  banks  in  New  York.  At  least  the  most 
case  hardened  classical  economist  will  admit  that  when 
Rockefeller  gets  control  of  an  industry  that  the  tempta- 
tion for  outside  capital  to  enlist  against  him  are  not  all 
powerful. 

It  seems  to  me  that  the  proof  that  trusts  are  inevi- 
table as  a  protection  against  the  rising  flood  of  capital 
is  simply  overwhelming  both  in  theory  and  in  fact. 

It  seems  most  palpable  that  every  industry  in  this 
country  must  in  time  fall  into  the  power  of  the  trust. 
The  trust  with  its  enormous  capital  not  only  gives  our 
domestic  capitalists  better  opportunities  for  competi- 
tion with  foreigners  in  foreign  neutral  markets  but  it 
is  itself  by  damming  up  the  old  and  natural  domestic 
channels  for  investment  actually  forcing  itself  to  cut 
out  new  channels  for  its  overflow. 

It  is  impossible  to  dam  up  all  the  mouths  of  the 
Mississippi  no  matter  how  high  the  dams.  A  flowing 
river  must  find  the  ocean  somehow  and  if  not  by  one 
channel  then  by  another.  The  trusts  are  affording  but 
a  temporary  breastworks  for  our  captain  of  industry. 


13 

l£  will,  however,  be  a  flank  movement  rather  than  a 
frontal  attack  that  will  finally  dislodge  the  captains 
from  their  fortress.  The  trust  is  not  only  a  protection 
against  undue  competition  but  it  is  a  labor  saving  de- 
vice of  the  highest  possible  efficiency.  Every  argu- 
ment in  favor  of  combined  production  on  a  small  scale 
is  redoubled  for  production  on  the  largest  possible 
scale.  The  trust  pursues  its  ends  in  a  perfectly  sane 
and  scientific  manner.  No  longer  do  the  old  planless 
methods  of  competition  prevail.  The  trust  being  the 
only  producer  in  the  field  produces  exactly  what  the 
market  needs.  There  is  no  more  danger  of  either  an 
over-production  or  a  shortage  of  Standard  oil  in  any 
city  than  there  is  of  water,  gas,  or  postage  stamps. 
The  trust  no  more  needs  canvassers  and  advertisements 
to  sell  its  goods  than  does  the  government  to  advertise 
the  postoffice.  This  increased  industrial  efficiency  of 
the  trust  together  with  its  prevention  of  waste  of  capi- 
tal in  unnecessary  duplication  of  machinery  hasten  by 
so  much  the  completion  of  the  world's  industrial  outfit. 

Capital  will  in  vain  seek  profitable  investment.  In- 
terest which  is  determined  by  the  amount  of  gain  re- 
ceived by  the  last  amount  borrowed  will  fall  to  zero  and 
still  money  will  remain  unlent  in  the  banker's  hands. 
The  last  incentive  for  the  poor  man  to  be  "thrifty"  will 
perish.  When  the  work  is  completed  the  workers  en- 
gaged in  producing  new  machinery  of  production  will 
join  the  unemployed  army  in  regiments.  The  trust 
will  be  as  defenseless  against  this  new  phase  in  the  in- 
dustrial strife  as  was  the  armored  knight  of  old  against 
hunger  and  thirst.  Political  autocracy  is  possible  but 
industrial  autocracy  even  if  benevolent  is  impossible. 
At  present  the  trust  is  an  invaluable  and  absolutely 
necessary  weapon  of  defense  for  the  capitalist  in  the  in- 
dustrial warfare  but  when  the  enemy  to  be  fought  is 
not  invading  capital  but  a  complete  cessation  of  demand 
for  products  owing  to  unemployed  labor  it  no  longer 
protects  the  owner.  On  board  ship  in  mid  ocean  if  I  have 
control  of  the  water  supply  I  can  demand  everything 
in  exchange  for  the  indispensable  fluid  but  when  at  last 
I  have  gathered  everything  into  my  possession  then  my 


1.4  ^ 

monopoly  is  of  no  more  value,  as  there  is  nothing  left 
to  be  given.  If  I  am  wise  I  will  then  peaceably  give  up 
control  of  the  water  and  let  it  be  taken  over  by  the  crew 
collectively.  I  will  be  in  great  luck  if  they  do  not 
get  the  fever  of  co-operation  and  come  back  after  me 
for  the  good  things  they  have  already  given  up  for  the 
first  water  they  were  forced  to  buy.  It  is  thus  in  the 
United  States.  The  monopolists  have  unwittingly  run 
both  themselves  and  the  workers  into  an  industrial  cul 
de  sac. 

The  capitalists  may  possibly  see  the  danger  first  and 
make  a  turn  that  will  give  them  a  short  and  precarious 
lease  of  life  in  their  present  position.  An  eight-hour 
law,  old  age  pensions,  etc.,  all  such  reforms  may  extend 
the  capitalist  system. 

The  best  thing  of  all,  however,  to  bolster  up  the  cap- 
italist system  is  a  rattling  good  war  between  the  great 
powers  followed  up  by  a  prolonged  civil  war  with  great 
destruction  of  life  and  property. 

If  the  principal  industrial  plants,  railway  shops  and 
bridges,  etc.,  of  this  country  were  destroyed  the  up- 
building of  them  would  give  labor  unlimited  employ- 
ment and  capital  great  scope  for  investment  of  savings. 
Witness  the  boom  following  our  civil  war,  also  the  late 
Spanish  war.  The  protective  tariff  is  so  far  as  it  goes 
a  supporter  of  the  present  industrial  system  inasmuch 
as  it  prevents  labor  and  capital  functioning  at  the  point 
of  greatest  advantage. 

A  protective  tariff  gives  better  employment  to  labor 
exactly  as  inferior  machinery  requires  more  men  to  op- 
erate_it  than  superior.  A  change  in  the  money  stan- 
dard from  gold  to  silver  or  paper  would  possibly  also 
extend  the  time  for  a  final  collapse  of  the  capitalistic 
system  by  reason  of  the  industrial  derangements  it 
would  cause.  At  best  all  the  advocates  of  silver  can. 
hope  for  is  a  little  longer  life  for  the  small  capitalist 
who  is  inevitably  doomed  under  our  present  competi- 
tive system  no  matter  what  money  standard  we  may 
have.  Personally  I  have  never  been  able  to  see  how, 
for  instance,  the  California  orange  grower  could  get 
more  profits  through  silver  coinage  when  Mr.  Hunting- 


15  , 

ton  stands  at  hand  to  take  it  away  if  he  does  get  it 
simply  by  raising  railway  freight  charges. 

Then  if  Mr.  Huntington  overlooked  anything  the 
poor  farmer  still  had  a  long  gauntlet  to  run,  with  Mr. 
Rockefeller  reaching  for  his  surplus  when  he  wants 
oil,  Mr.  Havemeyer  for  it  when  he  buys  sugar,  etc.,  ad 
infinitum. 

Some  have  suggested  that  free  trade  and  equal 
freight  rates  obtained  by  government  ownership  of  rail- 
roads would  destroy  trusts.  The  slightest  investiga- 
tion, however,  would  show  that  many  trusts  do  not  in 
the  least  depend  upon  favors  from  either  railroads  or 
government.  The  taking  over  of  the  railroads  by  the 
government  would,  however,  have  most  far-reaching 
and  revolutionary  results.  The  immense  labor  saving 
that  would  occur  from  a  centralized  management  would 
of  course  serve  but  to  accentuate  the  unemployed  prob- 
lem. This  would  be  the  least  of  its  effects. 

The  capital  invested  in  railroads  is  half  the  whole 
industrial  capital  of  the  United  States.  A  transfer  of 
ownership  to  the  State  would  mean  the  payment  to  the 
present  railway  owners  of  an  enormous  sum  of  money 
that  would  naturally  seek  investment  in  other  indus- 
tries. 

These  industries  are  already  about  at  the  point  of 
crystallizing  into  monopolies  owing  to  plethora  of  cap^ 
ital  and  the  advent  of  such  an  enormous  flood  of  money 
set  free  by  the  expropriation  of  the  railroad  owners 
would  not  only  complete  the  process  but  would  cause 
the  amalgamation  of  trusts  into  one  huge  trust,  the 
coming  trust  of  trusts. 

Nationalization  of  the  railways  would  be  letting  free 
such  a  flood  of  capital  that  the  ark  of  state  would  be  im- 
mediately floated  into  socialism. 

To  resume :  We  are  confronted  by  a  fact  and  not  a 
theory.  The  trust  is  here  and  here  to  stay  as  long  as 
our  competitive  system  of  industry  endures. 

Democracy  has  been  ousted  from  industry  by  au- 
tocracy and  as  our  political  institutions  are  but  a  re- 
flection of  our  industrial  institutions  we  should  not 
pretend  that  anything  but  a  sham  democratic  political 


16 

state  remains.  When  we  see  imperialism,  which  is 
simply  political  autocracy,  expressing  itself  in  the 
Philippines  or  in  the  bullpen  for  the  Idaho  miners  we 
should  not  stultify  ourselves  by  striving-  to  prevent  a 
result  without  first  attacking  the  cause. 

The  trade-unionists  pure  and  simple,  the  anti-im- 
perialists, the  would-be  destroyer  of  trusts  are  all  right 
sentimentally,  but  are  too  limited  in  their  vision.  This 
nation  has  the  mightiest  task  cut  out  before  it  that  the 
world  has  ever  set  to  perform.  The  ship  of  state  is  in 
the  Niagara  above  the  falls.  It  is  not  yet  too  late  to 
sail  down  into  the  quiet  waters  of  socialistic  Ontario 
around  the  rapids  and  the  terrible  falls  if  we  only  have 
the  patience  and  brains  to  cut  our  political  Welland 
canal.  Delay  is  most  dangerous.  That  we  shall  final- 
ly get  into  our  metaphorical  Ontario  is  absolutely  cer- 
tain. The  only  question  is  shall  we  go  over  the  falls 
or  through  the  canal.  Now  is  the  time  if  ever  when 
this  country  needs  earnest  men  who  know  the  truth  and 
are  not  afraid  to  cry  it  from  the  housetops.  Once  let 
us  get  into  the  rapids  and  nothing  can  possibly  save 
us  from  the  terrors  of  a  violent  revolution.  Democ- 
racy must  be  established  in  industry  and  re-established 
politically.  There  is  really  no  first  step  to  nationaliza- 
tion of  industry,  that  time  has  passed.  Half-way 
measures  are  impossible  industrially  and  unsound  po- 
litically. Revolution  and  not  reform  must  be  our  bat- 
tle cry.  The  main  plank  and  in  fact  the  only  neces- 
sary plank  in  our  political  platform  should  be:  We 
demand,  The  Nationalization  of  Industry. 


14  DAY  USE 

RETURN  TO  DESK  FROM  WHICH  BORROWED 

LOAN  DEPT. 

This  book  is  due  on  the  last  date  stamped  below,  or 

on  the  date  to  which  renewed. 
Renewed  books  are  subject  to  immediate  recall. 


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